NEED HELP FROM BP COMMUNITY

[Cory Dahlquist]

I wrote a post on one of the BiggerPockets Facebook groups but did not get a lot of feedback, so hoping for more interaction here!  I'll try to keep this short while still providing numbers and details...

My family and I have a little under 14 years left on our mortgage (2.65%, $1000/mo). We have a $60,000 HELOC with $30,000 available (interest-only payments).

A friend who is a local realtor, and also owns rental properties, suggested we find a new (to us) house for the family and keep our current house to rent out. We could rent our current house for $1700-$1800/mo. T&I is currently $300, so we would cash flow $400-$500. After cap ex & maintenance we're looking at ~$200/mo NOI.

Another friend who's a mortgage broker suggested if we move, to keep out of pocket costs down, get a conventional loan with 5% down payment. We would use the HELOC for down payment. The intent with the new (to us) house would be to do the same thing: live there for a while, make minor improvements/renovations, find a new house for us to live in and keep this house to rent out.

So, to my question...What would you do?  Would you go this route if starting your real estate investment and rental properties journey?  Or would you rather have 20% down payment for an investment property?  

In the most ideal scenario my family and I can stay in our house and have enough for a down payment on an investment property. If we go that route, it will take us 3-5 years to start. With only needing 5% down for a house, rather than 20% for investment property, I saw an opportunity to get into REI quicker than saving 20% down. But I do not want to put my family in a financial hole before we even start landlording, so I am relying on advice from the BP community who have experience.

Let me know if you have any questions, and thank you in advance!